Regulations are the primary concern of community bankers, according to the 2024 Conference of State Bank Supervisors (CSBS) Annual Community Bank Survey.
Community banks, according to the survey, also cited cost of funds as a top external concern.
“Last year, banks were worried about a recession. This year, they are more concerned about the cost of compliance after increased federal regulatory and supervisory activity over the last 18 months,” CSBS President and CEO Brandon Milhorn said. “With economic headwinds still blowing, regulators must stay focused on core financial risks and be wary of regulatory overreach that adds unnecessary burden on the backs of our community banks.”
Other top external concerns this year include net interest margins and core deposit growth.
In addition, survey respondents continue to view cybersecurity as the highest internal risk to their banks. Technology implementation and costs ranked second, up from a tie for third in the 2023 survey. They replace liquidity, which held the second spot in last year’s survey.
Survey respondents added that while inflation-created challenges are likely to persist, they said they are manageable. However, bankers said the effects of inflation are most impactful on costs of deposits, followed by personnel expenses, the value of securities investments, and operating expenses.
The CSBS survey, now in its 11th year, captures the views of community banks with less than $10 billion in total assets on various risks. A total of 370 community bankers from 38 states participated.
The Conference of State Bank Supervisors is the national organization of financial regulators from all 50 states, American Samoa, District of Columbia, Guam, Puerto Rico, and U.S. Virgin Islands.